Matthew Yglesias accuses me of offering “bad math” in a post the other day. The accusation is a little mystifying. My post criticized Jacob Weisberg for claiming that President Bush had been unwilling to cut Social Security benefits and had instead balanced the books on his reform plan by invoking high stock-market returns. That wasn’t true. Bush proposed cuts in future benefits. Yglesias doesn’t dispute any of this.
His point is that Bush did cook the books to make personal accounts seem like a better deal than an unreformed Social Security. Even if that were true, it would be irrelevant to the point I made. It wouldn’t, that is, show me to be guilty of any mathematical error.
I’m also not sure that Yglesias’s charge against the White House holds up. It didn’t just invent a figure for projected stock-market returns; it relied on the Social Security Administration’s actuaries. Yglesias argues that those returns imply strong economic growth, which would in turn make an unreformed Social Security look better. The reformers thus failed to apply consistent assumptions. But higher growth wouldn’t bring an unreformed Social Security into long-term balance. It would only push the problem further out. Higher growth would lead to higher wages, and benefits, being tied to wages, would therefore go up. Higher growth would solve the problem only if something were done to change the benefits formula–such as tying benefits more closely to prices than wages. Which the president proposed. Which was my original point.